Traditional financial institutions' approach to crypto is nothing new, but their approach is gradually changing. Instead of just focusing on custody or trading, many large banks are beginning to experiment with models that directly integrate crypto into their lending operations. The latest move by Sberbank – Russia's largest bank – to test loans secured by crypto assets is a notable example.
This experiment not only reflects a shift in the mindset of traditional banks, but also reveals an increasingly clear intersection between DeFi and the existing financial system.
Crypto-backed mortgage loans: What is Sberbank testing?
According to published information, Sberbank is researching a model that allows customers to use digital assets as collateral for Capital. Instead of being forced to sell crypto for liquidation, holders can access loan Capital while maintaining a long-term asset position.
Essentially, this is a familiar model in DeFi, where lending protocols allow users to collateralize crypto to borrow stablecoins or other assets. However, when a traditional bank implements a similar model, legal, risk management, and compliance factors will play a central Vai .
Why is this experiment strategically significant?
Firstly, it opens up a new liquidation channel for crypto assets. For many years, crypto was primarily viewed as a speculative asset or a store of value. Being accepted as collateral in the traditional banking system brings crypto closer to Vai as a genuine financial asset.
Secondly, Sberbank is learning directly from DeFi but applying it within a more tightly controlled framework. DeFi protocols typically operate automatically, relying on smart contracts and price oracles. In contrast, banks can incorporate asset pricing, higher margins of safety, and manual liquidation terms to mitigate volatility risk.
Third, this is a proactive step to ensure banks are not left behind. As DeFi increasingly proves effective in providing decentralized credit, traditional financial institutions will be forced to find ways to integrate or adapt, rather than simply observing from the sidelines.
The biggest challenge: Volatility and legal issues.
Despite its potential, crypto-backed mortgage loans still face significant challenges.
Price volatility is the biggest risk. Crypto could plummet in a short period, forcing banks to apply high collateral ratios or margin call mechanisms. This could reduce the product's attractiveness to the general public.
In addition, there are legal issues. The legal framework for crypto in many countries remains unclear, especially for products related to credit. Banks must ensure compliance with regulations on anti-money laundering, asset origin verification, and consumer protection.
A sign of a broader trend.
Sberbank's experiment should not be seen as an isolated event. Globally, an increasing number of traditional financial institutions are seeking to harness the value of digital assets through structured products, investment funds, or custody services.
The key difference here is integrating crypto directly into lending – a core function of banking. If this experiment is successful, it could pave the way for hybrid models where DeFi provides the idea and mechanism, and TradFi provides scale, trust, and compliance.
Sberbank's experiment with crypto-backed loans shows that the lines between DeFi and traditional finance are blurring. Instead of direct competition, these two ecosystems may be moving towards a phase of learning from and complementing each other.
In the long term, such hybrid models could play a crucial Vai in transforming crypto from a niche market into a genuine part of the global financial system.
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The article "Russia's Largest Bank Sberbank Tests Crypto-Backed Mortgage" first appeared on CoinMoi .
